Last week, the Washington Post ran this front-page article entitled “A Quiet Windfall for US Banks.” The article discussed Notice 2008-83 that the IRS issued back on September 30th. This Notice allows more effective use of unrealized losses in loans held by a bank following a change in ownership of the bank. Specifically, the Notice effectively suspends certain limitations that otherwise would apply under Section 382 of the Code. The Notice is not limited to government takeovers but also applies to changes in ownership arising from private investments.
As the article notes, this is groundbreaking – and surprising – stuff as the Notice may be significant not only in evaluating bank acquisitions but also in determining the consequences of new issuances of stock, either alone or when combined with other shifts in ownership. We have posted memos on this development in our “Tax” Practice Area.